What is a short sale?
A short sale happens when a lender is willing to accept a lower
pay off on a loan than what is currently owed. In a short
sale, the borrower will owe more on the property than the
home is worth at its current state, however, a short sale
happens only when a homeowner qualifies through some kind
of hardship.
Why should I short sale my home?
To settle for a foreclosure means accepting the damage to your
credit a foreclosure would bring. It also means accepting
the fact that in many states, the lender will seek a deficiency
judgment in the amount that is owed. A short sale by itself
will typically lower your credit score by 50-120 points,
however the hardest hit on your credit will be from missed
mortgage payments, not the short sale itself. Your credit
will usually recover from a short sale in as little as
two years, whereas a foreclosure could dampen your ability
to take out any future mortgage loans for at least five
years.
Do I get any money back from a short sale?
In many cases, cash back incentives are given to homeowners
who complete the short sale successfully. The Home Affordable
Foreclosure Alternative program offers homeowners $3,000
cash back to help with relocation expenses. This money
is in addition to any other relocation assistance and incentives
specific to your lender.
How do I qualify for a short sale?
While lenders have become more lenient in recent times, there
are typically three qualifications required for a short
sale.
- Financial Insolvency (no other major assets),
- The proceeds from the sale of the property, after all closing costs are paid, are less than the amount currently owed on the property, and
- Financial hardship. Acceptable hardships may vary, but some common ones are; loss of income or employment, divorce or separation, relocation or job transfer, property in need of repairs without resources to make repairs, major illness and medical expenses, death of a family member, vacant rental properties, etc. In most cases, a short sale is not for those who want to sell, but only for those that have to sell.
Who will pay the short sale Realtors© commission?
The lender will customarily take care of all fees associated
with the short sale process; this meaning your short sale
specialist as well. In most cases, borrowers pay nothing
out of pocket to complete a short sale.
What happens with the money that is forgiven by my lender?
Any difference on your mortgage will typically be written off
as a loss by your lender. Some lenders may send out a 1099
for the amount that was forgiven. However, the Mortgage
Debt Relief Act of 2007 states that you will not be required
to pay taxes on the money if you did a short sale on your
primary residence before the expiration of the bill. The
bill however is not quite that simple. Consult the appropriate
representation in all tax and legal matters.
Can I still do a short sale even If I am going through
a foreclosure?
Absolutely. You will not be asked to move out until the closing.
If your specialist is actively working with your bank, your
lender will typically delay the foreclosure proceedings making
it possible for you to stay in your home a little longer.
What should I be aware of when doing a short sale?
There are unfortunately many who crave individuals who are
in a financial hardship or facing foreclosure to take advantage
of them and profit from their misfortune. These scammers
will make deals sound enticing, but are only in it for
themselves. Never sign a quit claim deed, power of attorney
or an option contract without consulting an experienced
short sale Realtor© and an attorney. Remember, nobody
can look out for your interests in a transaction while
trying to make as much profit from your situation as much
as possible at the same time.
Can my current Realtor© handle my short sale?
This is a question that really needs to be researched. Short
sales are specifically designed to be handled by experienced
short sale specialists who have many short sales completed
under their belt and the proof to back it up. There may
be Realtors who claim they can take on a short sale, but
it's very important to check out their proof to those
claims. It would be devastating to begin a short sale only
to see it was rejected due to an incompetent Realtor© who
claimed to be able to bring you to a successful completion
of your short sale. When searching for a short sale specialist,
make sure you have a list of questions you would like them
to answer and make sure you can feel completely comfortable
with them. There are also many who claim to be distressed
property experts after taking a weekend training class
and earning a certification. While proper training is one
factor to consider, experience is everything.
Jennie is a Real Estate professional at Jennie Shook (License
No. BR551744000), covering the greater Prescott Valley AZ area.
She holds special certifications as "Short
Sale Specialist" and
"Certified Distressed Property
Expert".
Phone: 928-458-9453
Contact Us.
Helping Prescott Valley AZ home owners avoid foreclosure with a short sale.
Jennie Shook specializes in short sales in Prescott Valley AZ. I am your Prescott Valley AZ Short Sale Specialist Realtor and Prescott Valley AZ loan modification and distressed property expert. This article and content is for general informational purposes and may not be accurate. This should not be taken as legal advice, technical or tax advise under any circumstance. Seek legal advise and representation in all legal matters.
